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Texas Instruments (TXN) Down 1.8% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Q3 Earnings and Revenues Beat Estimates
Texas Instruments reported third-quarter 2024 earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate by 8.1%. The figure came at the higher end of the guided range of $1.24-$1.48 per share. However, the figure declined 20.5% year over year.
TXN reported revenues of $4.15 billion, which beat the Zacks Consensus Estimate by 1%. The figure came at the higher end of management’s guidance of $3.94-$4.26 billion. Revenues decreased 8.4% year over year and increased 8.6% sequentially.
Due to continued cyclical recovery, TXN’s Personal Electronics end market grew around 30% sequentially, Enterprise Systems was up around 20%, and Communication Equipment was up around 25%. The automotive market also grew in high single digits, buoyed by strength in the Chinese end market, while the industrial market was down low single digits due to customers’ inventory challenges.
TXN’s Segments in Detail
Analog: Revenues of $3.22 billion were generated from the segment (77.6% of total revenues), down 4% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.08 billion.
Embedded Processing: Revenues amounted to $653 million (15.7% of total revenues), down 26.6% year over year. The figure missed the Zacks Consensus Estimate of $724 million.
Other: Revenues totaled $275 million (6.6% of total revenues), down 4.7% from the prior-year quarter’s level. The figure lagged the consensus mark of $288.3 million.
Texas Instrument’s Operating Details
Texas Instruments’ gross margin of 59.6% contracted 251 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 34 bps year over year to $428 million in the reported quarter.
Research and development expenses of $492 million expanded 146 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.44%, which contracted 431 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Sept. 30, 2024, the cash and short-term investment balance was $8.75 billion compared with $9.7 billion as of June 30, 2024.
At the end of the reported quarter, TXN’s long-term debt of $12.84 billion remained almost the same compared to the previous quarter. The current debt was $1.05 billion, the same as the previous quarter.
Texas Instruments generated $1.7 billion of cash from operations, up from $1.57 billion in the previous quarter.
Capex was $1.3 billion in the reported quarter, and the company reported a free cash flow of $416 million.
Texas Instruments paid out dividends worth $1.19 billion in the reported quarter. It repurchased shares worth $318 million.
Texas Instrument’s Guidance
For fourth-quarter 2024, TXN expects revenues between $3.70 billion and $4 billion. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is currently pegged at $4.11 billion, indicating an increase of 0.83% from the year-ago quarter.
The company expects earnings per share between $1.07 and $1.29. The consensus mark for the same is pegged at $1.36 per share, indicating a fall of 8.7% from the year-ago quarter.
The company expects the effective tax rate to be approximately 13%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -12.43% due to these changes.
VGM Scores
At this time, Texas Instruments has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Texas Instruments (TXN) Down 1.8% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Texas Instruments (TXN - Free Report) . Shares have lost about 1.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Texas Instruments due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Texas Instruments Q3 Earnings and Revenues Beat Estimates
Texas Instruments reported third-quarter 2024 earnings of $1.47 per share, which surpassed the Zacks Consensus Estimate by 8.1%. The figure came at the higher end of the guided range of $1.24-$1.48 per share. However, the figure declined 20.5% year over year.
TXN reported revenues of $4.15 billion, which beat the Zacks Consensus Estimate by 1%. The figure came at the higher end of management’s guidance of $3.94-$4.26 billion. Revenues decreased 8.4% year over year and increased 8.6% sequentially.
Due to continued cyclical recovery, TXN’s Personal Electronics end market grew around 30% sequentially, Enterprise Systems was up around 20%, and Communication Equipment was up around 25%. The automotive market also grew in high single digits, buoyed by strength in the Chinese end market, while the industrial market was down low single digits due to customers’ inventory challenges.
TXN’s Segments in Detail
Analog: Revenues of $3.22 billion were generated from the segment (77.6% of total revenues), down 4% from the year-ago quarter’s level. The figure came above the Zacks Consensus Estimate of $3.08 billion.
Embedded Processing: Revenues amounted to $653 million (15.7% of total revenues), down 26.6% year over year. The figure missed the Zacks Consensus Estimate of $724 million.
Other: Revenues totaled $275 million (6.6% of total revenues), down 4.7% from the prior-year quarter’s level. The figure lagged the consensus mark of $288.3 million.
Texas Instrument’s Operating Details
Texas Instruments’ gross margin of 59.6% contracted 251 basis points (bps) from the year-ago quarter’s level.
As a percentage of revenues, selling, general and administrative expenses contracted 34 bps year over year to $428 million in the reported quarter.
Research and development expenses of $492 million expanded 146 bps from the year-ago quarter’s level as a percentage of revenues.
The operating margin was 37.44%, which contracted 431 bps from the prior-year quarter’s number.
TXN’s Balance Sheet & Cash Flow
As of Sept. 30, 2024, the cash and short-term investment balance was $8.75 billion compared with $9.7 billion as of June 30, 2024.
At the end of the reported quarter, TXN’s long-term debt of $12.84 billion remained almost the same compared to the previous quarter. The current debt was $1.05 billion, the same as the previous quarter.
Texas Instruments generated $1.7 billion of cash from operations, up from $1.57 billion in the previous quarter.
Capex was $1.3 billion in the reported quarter, and the company reported a free cash flow of $416 million.
Texas Instruments paid out dividends worth $1.19 billion in the reported quarter. It repurchased shares worth $318 million.
Texas Instrument’s Guidance
For fourth-quarter 2024, TXN expects revenues between $3.70 billion and $4 billion. The Zacks Consensus Estimate for fourth-quarter 2024 revenues is currently pegged at $4.11 billion, indicating an increase of 0.83% from the year-ago quarter.
The company expects earnings per share between $1.07 and $1.29. The consensus mark for the same is pegged at $1.36 per share, indicating a fall of 8.7% from the year-ago quarter.
The company expects the effective tax rate to be approximately 13%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -12.43% due to these changes.
VGM Scores
At this time, Texas Instruments has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Texas Instruments has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.